Investor Commitment Mechanism - Self-funded Search

June 29, 2024
by a searcher from IESE Business School in New York, NY, USA
Is there any commitment mechanism for self-funded searches?
For example, with funded searches, investors inject money which searchers use for salary and other expenses. Therefore, the investors have some skin in the game and given reason to want to see the search end with a transaction. I've been thinking about whether investors for self-funded searchers would be less engaged/supportive in the search phase when they do not have this incentive.
Has anyone seen any sort of committment mechanism similar to a LOI where investors would commit to a certain level of advisory or serious consideration to deals brought by the searcher, or is this relationship more one of trust and goodwill? Instinct tells me the searcher would need to much more proactively communicate and engage investors throughout the search than a traditional/funded searcher would. Anyone have experienc with this?
Thank you!
from Fundação Getulio Vargas, São Paulo in São Paulo, SP, Brasil